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Prepaid credit cards
Find out how prepaid credit cards work to see if they are right for you.
Prepaid credit cards are pre-loaded cards that function very similarly to debit cards. You don’t need to have your credit rating checked to get a prepaid credit card, so they are easier to qualify for than standard credit cards.
This guide will cover the basics of prepaid cards in the Netherlands, including how they work, the fees involved and how you can pick the right prepaid credit card for your spending needs.
Compare a range of digital bank cards in the Netherlands
Disclaimer: The products listed on this page are not representative of the whole market.
How do prepaid credit cards work?
Just like a credit card, prepaid cards can be used for cashless payments, but involve spending money you already own instead of borrowing cash from the bank. This means you can spend without worrying about overdraft fees, interest charges or a potential impact on your credit score.
Here’s a quick summary of how prepaid credit cards generally work in the Netherlands.
- Purchase the card. Prepaid cards may be purchased easily online. The registration process typically involves providing basic personal details, such as your full name, address and contact number.
- Add money to the card. Load your card up with money at participating stores or through the app. You might also be able to top up your card by linking it to an existing bank account you hold.
- Make purchases. As mentioned, prepaid credit cards may be used just like standard credit cards. You can use prepaid credit cards both online and in-store. The only difference is you’re only using the money you’ve loaded onto the card.
- Top up your card again when you’re running low. You can only spend the value on your card, so remember to keep topping it up if you want to keep spending. You can usually check your value at an ATM or through the app.
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Benefits of using a prepaid credit card
Considering getting a prepaid credit card? Here’s what you stand to gain with one.
- No credit checks required. Prepaid cards don’t involve borrowing money from the bank, so credit checks aren’t required for sign-ups. Additionally, how you use your prepaid card won’t affect your future credit score.
- No bank account required. If you’ve just moved to the Netherlands and don’t have a bank account yet, a prepaid credit card is a great option to consider. You don’t need a bank account to spend your money. This is also a good security feature because if your card is stolen, you’re only risking the stored value, not your whole bank account.
- No overdraft fees, interest charges or debt. Prepaid cards do not involve borrowing, so there are no bank interest charges, overdraft fees, or debt that you can accrue.
- Available to younger people. You have to be 18 years or older to open a bank account in the Netherlands, but some prepaid cards might have lower age restrictions. Prepaid credit cards can also be a great entry into money management.
- Easy management. Prepaid cards, especially those offered by digital banks, may come with added online functionality for easy management.
Fees involved with prepaid credit cards
In spite of the benefits mentioned, you should watch out for the fees associated with prepaid cards before committing to one:
- Initial purchase fee. Prepaid cards may come with a one-time sign-up fee, but this is often waived for cards ordered online.
- Monthly fee. Prepaid credit cards in the Netherlands may come with a monthly fee. However, these are usually charged for more premium cards.
- Top-up fee. Some providers charge a percentage-based fee when you top up your card up with extra cash.
- ATM fee. Certain prepaid credit card providers charge ATM fees per transaction, or when you go beyond a fixed number of free monthly transactions.
How to compare prepaid credit cards
With so many options to choose from, selecting a prepaid credit card can be a confusing process. Here are some factors you may wish to consider to help you make a better comparison.
- Features. The most standard prepaid credit cards come with basic top-up and spending features. However, certain providers offer prepaid cards with additional features, including online bill payments, direct deposits and even mobile banking functionality.
- Cost. Looking at the fees above, it’s no surprise that prepaid credit cards could be costly personal finance tools. Pick a card that comes with reasonable fees for the features you’re interested in.
- Convenience of top-ups. Prepaid credit cards tend to involve frequent top-ups, so the ease of topping up your card could definitely be a huge influencing factor. How flexible is your provider with top-up methods? How quickly are top-ups processed?
- Ease of withdrawing cash. Which ATMs does your provider allow you to withdraw cash from? How many such ATMs are in your area? Which stores accept your provider’s prepaid cards? These factors influence how easily you may spend with your card.
What to watch out for with prepaid credit cards
It’s important to understand both the benefits and shortcomings of prepaid cards before committing to one. These are some potential shortfalls that you should understand.
- No credit-building benefits. Since prepaid credit cards do not involve borrowing cash from the bank, they, therefore, do not contribute to your credit score.
- Fees. Fees vary between prepaid cards. Some charge a monthly fee and then have no fees for other things, such as ATM fees. Others will not charge a monthly fee but then will charge you for some ATM withdrawals. Make sure you understand what you will be charged.
- Top-up limits. Top-up limits will influence how conveniently you may use your card. This also affects how much you might have to fork out on top-up fees. As such, this feature could make prepaid credit cards inconvenient and even expensive to use.
- Declined charges. Since you may only spend what you hold, prepaid credit card users run the risk of spending more than their current balance. This often results in your card being declined, which not only could be embarrassing but also incurs card-decline fees.
- Prepaid credit cards may not be widely accepted. Many hotels and car rental agencies do not accept prepaid cards, preferring credit cards instead. Additionally, store merchants in the Netherlands tend to be pickier about the types of cards accepted. As such, you should go with more widely-name prepaid credit card providers so as to enjoy more spending choice.
Is a prepaid credit card right for you?
Prepaid credit cards are great options to consider for young adults learning about financial independence, as well as individuals who can’t qualify for credit cards due to credit concerns. Still unsure if a prepaid credit card is right for you? Take some inspiration from these common reasons for getting a prepaid credit card.
- You want to budget better. Prepaid credit cards may be great budgeting tools since you may only spend the amount you’ve initially loaded.
- You want a low-fee means of spending. Low-fee prepaid credit cards could be cheaper than low-fee debit cards since you avoid the account management fees associated with holding a bank account.
- You want to teach your child about responsible financing. Prepaid credit cards are great tools to teach your teen about finance — they’ll learn to spend within a budget without worrying about more complex issues like interest costs and overdraft fees.
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